FAIRBANKS — As the state nears what is expected to be a major announcement on the future of a large-diameter natural gas line for foreign export, Gov. Sean Parnell announced he’s on an economic trade mission to Japan and South Korea to promote the state’s gas.
In recent years, as the market for Alaska’s natural gas in the Lower 48 disappeared with the introduction of shale oil and gas, focus has shifted to Asian markets where growth and a shift away from nuclear power have ramped up demand for alternative energy sources.
Alaska, under a project headed by TransCanada and Exxon Mobil, has one of several projects that could meet the demand. Parnell’s visit, which includes visits with at least nine Korean and Japanese utilities and manufacturers, is aimed at showing why they should be interested in buying Alaska gas.
“We look forward to capitalizing on the enormous potential that exists for Alaska’s North Slope natural gas in our state and in Pacific Rim nations,” Parnell stated in a news release Tuesday. “This is a great opportunity to strengthen existing relationships and build new ones that will grow economic opportunity with Japan and South Korea.”
Department of Natural Resources Commissioner Dan Sullivan traveled to Asia last week to pave the way for the Parnell’s trip by visiting with company and government
In a teleconference with reporters Tuesday morning, Sullivan said a pipeline is going to be demand driven and that it’s critical to foster interest from Asia.
“We’re working to create a demand-driven project where countries and companies that need the gas are recognizing that ‘Wow, that large volume of gas on the North Slope sure looks like it has large potential and will fit into my energy security mix well,’” he said.
He said he worked to promote Alaska’s gas ahead of other countries, which also are looking to fill the need in Asia. He said the Asian buyers are wary about the unrest in the Middle East and shipping routes through strategic choke points such as the Strait of Hormuz.
“There’s not a lot of countries that were interested in doubling down on 75 percent more gas from the Middle East. All you’ve got to do is read the newspaper to see that that is a very risky proposition,” he said. “We possess something that is much more stable, reliable and, to be honest, not a lot of other areas of the world bring. The Russians don’t have it. The Qatari don’t have it.”
However, Sullivan said, Alaska’s gas does require a steep capital investment to build a pipeline and get the gas to market. That, he said, will need to be studied and will be a determining factor in whether or not a project moves forward.
A non-binding solicitation of interest held by TransCanada concluded earlier this month.
Last week, the Alaska Gasline Port Authority went public with a list of Asian companies interested in Alaska’s natural gas, totaling about 3 billion cubic feet of natural gas per day, about half of what would fill the proposed natural gas project.
The results of the input will be used to help determine the route a large natural gas pipeline will take, either to Valdez, Cook Inlet or Canada. An announcement on the route and whether or not the companies will proceed is expected later this year.
Sullivan said he believes the state’s prospects are promising but conceded that there are still challenges ahead and that the state is serious about bringing North Slope gas to market.
“I’m not saying that it’s fully going to happen but we think there’s been a lot of progress,” he said. “If it does seem at a certain point that there’s no way that the producers on the North Slope aren’t going to move forward on this, then we’re certainly going to move forward in another way.”
Contact staff writer Matt Buxton at 459-7544 or follow him on Twitter: @FDNMpolitics.